IDEAS home Printed from https://ideas.repec.org/p/ags/aaea00/21887.html
   My bibliography  Save this paper

A Theoretical And Empirical Investigation Of The Supply Response In The U.S. Beef-Cattle Industry

Author

Listed:
  • Aadland, David
  • Bailey, DeeVon
  • Feng, Shelly

Abstract

This paper investigates the response of beef cattle producers to changes in the price of cattle. Previous research has suggested that there may be a negative short-run supply response to a permanent increase in the price of cattle. We build a dynamic, rational expectations model that predicts that the supply response is generally positive, even for permanent shocks in the short run, and nests the negative supply response as a special case for appropriately restricted demand shocks. Using annual US time series data (1930-1997) and a simultaneous-equations econometric approach, we find a positive short-run supply response in the cow market and mixed evidence in the heifer market.

Suggested Citation

  • Aadland, David & Bailey, DeeVon & Feng, Shelly, 2000. "A Theoretical And Empirical Investigation Of The Supply Response In The U.S. Beef-Cattle Industry," 2000 Annual meeting, July 30-August 2, Tampa, FL 21887, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea00:21887
    DOI: 10.22004/ag.econ.21887
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/21887/files/sp00aa01.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.21887?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Randal R. Rucker & Oscar R. Burt & Jeffrey T. LaFrance, 1984. "An Econometric Model of Cattle Inventories," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(2), pages 131-144.
    2. Uhlig, H.F.H.V.S. & Ravn, M., 1997. "On Adjusting the H-P Filter for the Frequency of Observations," Discussion Paper 1997-50, Tilburg University, Center for Economic Research.
    3. James N. Trapp, 1986. "Investment and Disinvestment Principles with Nonconstant Prices and Varying Firm Size Applied to Beef-Breeding Herds," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 691-703.
    4. Rosen, Sherwin & Murphy, Kevin M & Scheinkman, Jose A, 1994. "Cattle Cycles," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 468-492, June.
    5. Capps, Oral & Farris, Donald E. & Byrne, Patrick J. & Namken, Jerry C. & Lambert, Charles D., 1994. "Determinants of Wholesale Beef-Cut Prices," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(1), pages 183-199, July.
    6. Yair Mundlak & He Huang, 1996. "International Comparisons of Cattle Cycles," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 855-868.
    7. Marsh, John M., 1991. "Derived Demand Elasticities: Marketing Margin Methods Versus An Inverse Demand Model For Choice Beef," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(2), pages 1-10, December.
    8. Harry J. Paarsch, 1985. "Micro-economic Models of Beef Supply," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 636-651, August.
    9. Sherwin Rosen, 1987. "Dynamic Animal Economics," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(3), pages 547-557.
    10. Nerlove, Marc & Fornari, Ilaria, 1998. "Quasi-rational expectations, an alternative to fully rational expectations: An application to US beef cattle supply," Journal of Econometrics, Elsevier, vol. 83(1-2), pages 129-161.
    11. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : I. The basic neoclassical model," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 195-232.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ndayitwayeko, W-M. & Odhiambo, M.O. & Nyangweso, P.M. & Korir, M.K., 2012. "Determinants of Beef Meat Supply in Burundi: A Vector Error Correction Model Approach Applied to structural Nerlov Paradign," 2012 Eighth AFMA Congress, November 25-29, 2012, Nairobi, Kenya 159414, African Farm Management Association (AFMA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Aadland, "undated". "The economics of cattle supply," Working Papers 2000-11, Utah State University, Department of Economics.
    2. Aadland, David, 2002. "Cattle Cycles, Expectations And The Age Distribution Of Capital," 2002 Annual meeting, July 28-31, Long Beach, CA 19795, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Aadland, David, 2004. "Cattle cycles, heterogeneous expectations and the age distribution of capital," Journal of Economic Dynamics and Control, Elsevier, vol. 28(10), pages 1977-2002, September.
    4. Mathews, Kenneth H., Jr. & Short, Sara D., 2001. "The Beef Cow Replacement Decision," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 19(2), pages 1-21.
    5. Mbaga, Msafiri Daudi & Coyle, Barry T., 2003. "Beef Supply Response Under Uncertainty: An Autoregressive Distributed Lag Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(3), pages 1-21, December.
    6. Chavas, Jean-Paul, 2000. "On information and market dynamics: The case of the U.S. beef market," Journal of Economic Dynamics and Control, Elsevier, vol. 24(5-7), pages 833-853, June.
    7. Lynn Hunnicutt & David Aadland, 2002. "Market Power with Dynamic Invertory Constraints: The Bias in Standard Measures," Working Papers 2002-15, Utah State University, Department of Economics.
    8. Chao, Hui-Ping, 1998. "Regime Switching In Us Livestock Cycles," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20824, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Hennessy, David A., 2006. "Feeding and the Equilibrium Feeder Animal Price-Weight Schedule," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 31(2), pages 1-23, August.
    10. Yeboah, Osei-Agyeman & Ofori-Boadu, Victor & Salifou, Samaila, 2009. "A Foot and Mouth Disease Induced Model of US Excess Supply of Beef," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46053, Southern Agricultural Economics Association.
    11. Li, Yunhan & Shonkwiler, Scott, 2016. "A Dynamic Model of U. S. Beef Cow Inventories," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235385, Agricultural and Applied Economics Association.
    12. Webber, C. A. & Graham, J. D. & MacGregor, R. J., 1988. "A Regional Analysis of Direct Government Assistance Programs in Canada and their Impacts on the Beef and Hogs Sectors," Working Papers 244071, Agriculture and Agri-Food Canada.
    13. Hunnicutt Lynn & Aadland David, 2003. "Inventory Constraints in a Dynamic Model of Imperfect Competition: An Application to Beef Packing," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 1(1), pages 1-24, March.
    14. Li, Yunhan & Shonkwiler, J. Scott, 2021. "The Vanishing U.S. Cattle Cycle: A Stochastic Cycle Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 46(3), September.
    15. Stockton, Matthew C. & Van Tassell, Larry W., 2007. "The Cattle Price Cycle: An Exploration in Simulation," 2007 Conference, April 16-17, 2007, Chicago, Illinois 37564, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    16. Chitose, Atsushi & Weaver, Robert D., 2007. "Dynamics of Slaughter Weight Response to Market Price Changes for Japanese Beef Cattle," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 9, pages 1-14.
    17. Chavas, Jean-Paul, 1999. "On The Economic Rationality Of Market Participants: The Case Of Expectations In The U.S. Pork Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(1), pages 1-19, July.
    18. Rezitis, Anthony N. & Stavropoulos, Konstantinos S., 2010. "Modeling beef supply response and price volatility under CAP reforms: The case of Greece," Food Policy, Elsevier, vol. 35(2), pages 163-174, April.
    19. Sah, Raaj, 2000. "Some results for the comparative statics of steady states of higher-order discrete dynamic systems," Journal of Economic Dynamics and Control, Elsevier, vol. 24(10), pages 1481-1489, September.
    20. Anders Skonhoft & José-María Da Rocha, 2012. "The dynamics of an animal - vegetation system: Sheep farming," Working Paper Series 13612, Department of Economics, Norwegian University of Science and Technology.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea00:21887. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.